The Financial Crisis in Greece and Its Impacts on Western Balkan Countries

The issue of financial crisis still remains a matter of concern for Western Balkan countries and Europe as a whole. In moments when the economies of these countries recover from recessions of global financial crisis, a new crisis threatens the region. Indeed, a considerable part of the financial sector of the Western Balkan countries is from the Greek capital, and the economic interdependency among them is relatively great. Therefore, the purpose of this paper is to investigate the probability of a spillover effect of the current Greek crisis to the countries of the Western Balkans. To test for this possibility, the authors make use of a binary logit model after outlining macroeconomic data for the sample countries. The authors conclude by discussing remedies on the impact of the contagion effect on the part of policy makers. The paper provides an interesting approach to a contemporary issue, having attracted little attention in terms of the spillover effect on neighboring countries. How the issue of debt crisis is handled by respective authorities and the European Union and which strategies are followed for crisis alleviation are discussed as well.